What is now Nutley was originally incorporated as Franklin Township by an act of the New Jersey Legislature on February 18, 1874, from portions of Belleville Township. Nutley was incorporated as a town on March 5, 1902, replacing Franklin Township.[20][21] In 1981, the town was one of seven Essex County municipalities to pass a referendum to become a township, joining four municipalities that had already made the change, of what would ultimately be more than a dozen Essex County municipalities to reclassify themselves as townships in order take advantage of federal revenue sharing policies that allocated townships a greater share of government aid to municipalities on a per capita basis.[22][23][24][25]
Nutley derived its name from the estate of the Satterthwaite family, established in 1844, which stretched along the Passaic River and from an artist's colony in the area.[26][27][28]
^"Removing Tiering From The Revenue Sharing Formula Would Eliminate Payment Inequities To Local Governments", Government Accountability Office, April 15, 1982. Accessed September 24, 2015. "In 1978, South Orange Village was the first municipality to change its name to the 'township' of South Orange Village effective beginning in entitlement period 10 (October 1978 to September 1979). The Borough of Fairfield in 1978 changed its designation by a majority vote of the electorate and became the 'Township of Fairfield' effective beginning entitlement period 11 (October 1979 to September 1980).... However, the Revenue Sharing Act was not changed and the actions taken by South Orange and Fairfield prompted the Town of Montclair and West Orange to change their designation by referendum in the November 4, 1980, election. The municipalities of Belleville, Verona, Bloomfield, Nutley, Essex Fells, Caldwell, and West Caldwell have since changed their classification from municipality to a township."
^Narvaez, Alfonso A. "New Jersey Journal", The New York Times, December 27, 1981. Accessed September 24, 2015. "Under the Federal system, New Jersey's portion of the revenue sharing funds is disbursed among the 21 counties to create three 'money pools.' One is for county governments, one for 'places' and a third for townships. By making the change, a community can use the 'township advantage' to get away from the category containing areas with low per capita incomes."